When a University Bookstore Prices Chemistry Textbooks at $200 Each,it

question 301

Multiple Choice

When a university bookstore prices chemistry textbooks at $200 each,it generally sells 120 books per month.If it lowers the price to $160,sales increase to 160 books per month.Given this information,we know that the price elasticity of demand for chemistry books is about

• A)1.29,and a decrease in price from $200 to $160 results in an increase in total revenue.
• B)1.29,and a decrease in price from $200 to $160 results in a decrease in total revenue.
• C)0.78,and a decrease in price from $200 to $160 results in an increase in total revenue.
• D)0.78,and a decrease in price from $200 to $160 results in a decrease in total revenue.

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Definitions:

Straight-Line Depreciation

A technique for spreading the expense of an asset uniformly over its expected lifespan.

Net Income

The sum a company is left with after all its expenses and taxes are removed from its income.

Crossover Point

The point at which two different financial scenarios yield the same result or where an investment's cost and benefits intersect.